Key Takeaways
- General ledger accuracy, bank reconciliations and financial reporting drove the most New Jersey school district audit findings. Timely records strengthen audit readiness.
- Application for State School Aid (ASSA) documentation and Public School Contract Law compliance require complete records to support enrollment, procurement and approvals.
- Board secretary and treasurer reports require timely reconciliation and accurate reporting. Year-round financial controls reduce audit findings and improve compliance.
As New Jersey school districts begin preparing for the FY2026 audit cycle, we took a closer look at FY2025 audit findings from 595 school districts across the state.
Our review identified approximately 200 findings across 100 New Jersey school districts. A key takeaway was clear: many of the most common findings were not caused by unusually complex technical rules, but by breakdowns in the everyday processes that support compliance and financial reporting. Below is a summary of the five most frequently reported findings, listed least to most.
While this article focuses on New Jersey school districts, many of these audit-readiness challenges are not unique to New Jersey. Reporting requirements may vary by state, but maintaining complete records, timely reconciliations and strong year-round financial reporting processes is important for every school district.
#5 — Board Secretary and Treasurer Reports: 13 Findings
For school districts and boards of education, the board secretary and treasurer reports are the monthly snapshots of the school district’s financial position. They show budget activity, expenditures, available balances, cash activity and whether accounts are being properly reconciled.
Common issues involved: late reports, reporting inaccuracies, reconciliation issues and differences between the board secretary report, treasurer report and the school district’s underlying accounting records.
School districts should review and reconcile the board secretary and treasurer reports each month, with differences investigated and resolved as they are identified. Before the June 30 reports are finalized and approved by the board, school districts should confirm that the reports are timely, supported and tied to the underlying accounting records.
#4 — Public School Contract Law: 14 Findings
Given the number of statutory requirements involved in school district purchasing, Public School Contract Law was one of the more common compliance areas identified in our review. Contract compliance requirements touch nearly every part of the purchasing process.
School districts were cited for issues related to quotation and bidding requirements, purchasing approvals, missing or incomplete documentation and inconsistencies in procurement procedures.
As audit preparation begins, school districts should review contracts and purchasing files to make sure support is complete and readily available. That includes quotes, bid documentation, board approvals, contracts, purchase orders, pay-to-play forms and other supporting records needed to demonstrate compliance.
School districts should also review their document-retention and filing procedures to ensure purchasing records are maintained consistently and can be easily located. By organizing this support before fieldwork, school districts can reduce delays, follow-up requests and potential exceptions.
#3 — Bank Reconciliations: 16 Findings
When bank reconciliations are delayed or reconciling items are not researched and resolved timely, the school district does not have a clear picture of its cash position. That can create challenges not only for year-end reporting and the monthly financial information presented to the Board of Education, but also for identifying potential cash-flow problems.
The recurring themes were delayed reconciliations, unresolved reconciling items, differences between bank records and the general ledger and inconsistent review procedures.
June 30 reconciliations should not be the first time old differences are identified. School districts should review bank reconciliations for all accounts throughout the year and make sure outstanding items are being researched and resolved. By year-end, each account should have a clear reconciliation trail, documented review and support for any remaining reconciling items.
#2 — Application for State School Aid (ASSA): 17 Findings
Because Application for State School Aid (ASSA) reporting is tied to student enrollment and state aid, the support behind the reported counts is especially important.
The issues identified generally involved incomplete or inconsistent support for reported enrollment, student status or other data used in the ASSA submission.
As school districts prepare for year-end and the next reporting cycle, now is the time to revisit those October ASSA numbers and make sure the support is available for inspection. That includes class rosters, food service applications, limited English proficient (LEP) scores, individualized education programs (IEPs), private school for students with disabilities contracts and other documentation supporting the counts reported. The audit-ready standard is straightforward: each reported count should be traceable to complete, consistent and accessible documentation.
#1 — General Ledger and Financial Reporting: 26 Findings
The most common finding category in our review came back to the foundation of the audit: the general ledger and related financial reporting activity.
Findings in this area generally involved material audit adjustments, inaccurate account balances and financial activity that was not posted, tracked or maintained timely during the year. Several of these findings involved activity outside the typical governmental funds, including areas such as student activities, enterprise funds and payroll agency activity.
For school districts, this is an important reminder that all financial activity should be tracked and supported throughout the year, whether it is maintained directly in the general ledger or through a separate supporting schedule. By the time auditors arrive, balances should be current, support should be organized, and activity outside the main operating funds should be just as audit-ready as the school district’s governmental funds.
We Can Help
The findings above are often the result of issues that build during the year as school districts manage reporting deadlines, purchasing requirements, student data, reconciliations, staffing changes and day-to-day accounting activity. The common thread is that audit readiness is not just a year-end exercise. It depends on records being maintained, reviewed and supported throughout the year.
PKF O’Connor Davies works with New Jersey school districts to help them prepare for a smoother audit. Depending on the school district’s needs, audit-readiness services may include:
- Reviewing reconciliations and year-end balances.
- Assisting with financial statements, the Schedule of Expenditures of Federal Awards (SEFA) and the Schedule of Expenditures of State Financial Assistance (SESFA).
- Helping implement new Governmental Accounting Standards Board (GASB) standards.
- Preparing supporting schedules and reviewing capital asset, debt, pension, other postemployment benefits (OPEB) and grant information.
- Identifying missing documentation, unusual balances, or classification issues before fieldwork begins.
The level of support we provide depends on our relationship with the school district. For audit clients, district management remains responsible for accounting records, judgments and final decisions. For districts we do not audit, we may be able to provide more extensive accounting and financial reporting assistance.
Our goal is to help school districts move through the audit process as smoothly, efficiently and manageably as possible, while maintaining the quality, accuracy and completeness expected in the final report.
Contact Us
If you have any questions, please contact your PKF O’Connor Davies client service team or:
Amy R. Neimeister, CPA, RMA, PSA
Partner
aneimeister@pkfod.com | 856.454.2325
Jennifer Bertino, CPA, RMA, PSA
Partner
jbertino@pkfod.com | 856.454.7303